February 18, 2008

Bill helps run Real Estate Latino. This is an emerging demographic that is overtaking most any other demographic in America. So great job Bill on your website, and we look forward to watching you grow.

This week we have a new offering. The book giveaway is Real Estate A La Carte. If websites like Redfin.com, ForSaleByOwner.com and others have not made you stand up and take notice. Perhaps this book will.

The premise is that the consumer just wants their house sold. And that because of the flow of information, the full fee agency is not necessary. Thus, to compete the author suggests breaking up your commissions into a menu of services. Much like a lawyer might charge.

As Stefan Swanepoel and I discussed in Part 2 of our interview series, your real estate industry is in an internal debate for standards. Much like Beta and VHS, or DVD and Blue Rey. For the first time ever, it is within the realm of possibility of the MLS being replaced.

Where the pendulum lands is anyones guess. However, if you are in this business it is best to get all sides. This is why Stefan's resource is so important, and fee for service approach is important to know even if you disagree with the model. As they say, "keep your friends close, your enemies closer."

June 19, 2006

The real estate industry is under pressure to change because of a couple major arguments.

1. Freely distributable MLS data2. Price gouging

Actually both fronts stem from the idea that the NAR is running a monopolistic organization, where prices are fixed and the listings data is controlled by the organization.

And it isn't totally manufactured either. I know of a local discounter that has been blackballed by local buyer agents. Its not official of course, it is subtle.

And, I know of local companies that have opted out of IDX!

In fact a leading consumer rights group, the Consumer Federation of America (CFA), on Monday issued a report charging that real estate industry members act as a cartel to stifle competition, resulting in higher prices and poorer service for homebuyers.

The argument goes that it is cheaper to operate a brokerage today because of technical advances.

...and most of your licensee friends sleep as the rug is being pulled right out from underneath.

May 14, 2005

In Real Estate Industry Faces Federal Antitrust Suit, Citing a May 9th article in the Wall Street Journal:" The Justice Department plans to file a lawsuit against the National Association of Realtors over policies that may stifle competition from on-line rivals."

However, Business Week says Justice is a considering deal for the behemoth Organization.

"The Justice Dept. is expected to cut a deal that would allow Web-focused discount brokers to compete better with traditional rivals...After an antitrust investigation lasting nearly two years, a closely watched dispute between the National Association of Realtors (NAR) and the Justice Dept. may not come to litigation after all. BusinessWeek Online has learned that lawyers for the DOJ and the Realtors organization are close to an agreement over how the powerful trade group can limit the access of online-focused discount brokers to multiple-listing service (MLS) data.

So the topic seems to be separating the players like oil to water.

On one side you have the discounters and Web Entrepreneurs, whilst on the other you have the traditionalists and those following the pied piper of real estate, NAR.

First of all what is the MLS? It was originally a loosely conglomerated group of homes for sale, represented by Realtors and their local governing body, the Board of Realtors.

Agents would often "share" a commission on the sale of the home (called a listing), if the agent would bring a buyer to the transaction. And, often the earned fee would be split-usually-down the middle.

These multiple listings were originally shared on 3x5 cards (No I wasn't around then, but I was told about this by the old timers when I sold property back in the late 80's).

The process of Multiple Listings has scaled into an efficient method of distribution as technology, and finally the Internet has improved wide scale data mining of these constantly changing listings of property for sale.

From 3x5 cards, to massive books to electronic distribution, the system has become efficient, but not necessarily effective.

And the culprit is the Greed of the Major Players in the industry. Who by the way, have the most dollars to sway NAR to their point of view.

NAR itself was the first to jump into the Internet as a protectionary measure against MSN and other Corporate Giants who had the technical ability to steal away the only tangible asset that the industry controls. It's homes for sale.

So along comes Realtor.com which the members of NAR financed under the auspice that the members would get the benefit thereof.

However, today Realtor.com uses its member listings to sell various incarnations of ad space to the rich members who can afford hefty fees. In fact, I recently was in talks with an Realty agency that contracted for $70,000 in ads with the site.

So companies like my example get the spoils whilst the smaller companies barely get a taste. (gratuitous plug coming....Although, my clients do very well without sucomming to NAR's the Soprano like leverage-:-))

Realtor.com & NAR also allow listing data to be openly displayed without forced registration, which I believe is a poor model to its membership and cheapening the data. (Just think of the Recording industry argument against Napster).

Meanwhile, real estate giants like Cendent and Caldwell Banker and others have been quietly creating their own MLS of their own franchisee company properties.

When I was an agent, the mantra was, "those who control the listings, control the market". These monster Realtors edge towards monopolistic behavior (in my opinion) as they take that philosophy to the next level.

They are not only creating their own protectionist MLS systems, some companies have actually opted out of the local display of their listings on the MLS with lame excuses such as: they do not want their listings displayed without their name listed as the listing agent, and they want to control their data (their client properties that their clients have asked them to expose to as many potential buyers as possible) such that discounters cannot use it to capture their own clients.

What the industry does not want to accept is coming clean from the dirty lie that has permeated its philosophy for time and immortal. Open Houses, Classified Ads, Full Color Ads, Mailers,and now a personal Realtor website does not sell a home. These mediums are designed to capture leads.

These tools are 99% effective at creating prospects. And 1% effective at creating a direct sale. Someone calls or registers to see one property which helps set up their buy criteria that will lead them into something else.

So on one hand the industry claims consumer interest in their fight to limit access to all members, while on the other hand shoring up their own MLS systems.

So as the leaders of the industry fight to protect their clients, they really are hurting their clients. There is no public outcry over being able to sell a home for $500. There is no public outcry for getting 1% rebated back to them. Yet lower exposure does hurt the consumer.

So this is clearly not in the public interest.

However, it isn't in the industries interest either.

This behavior will only disintegrate the Realtor perception as the industry will be seen as protectionist of higher fees and lower performance. It cannot continue as value always wins.

If anyone in Washington or wherever NAR is located had an ounce of marketing savvy they would get their focus off fees (which is proof that the industry suffers from commodititess-read thru for definition) and get their focus on moving the public perception onto what the industry does really well. That is represent their buyers and sellers in marketing, negotiation, and closing of the publics most valuable psychological and monetary asset.

Instead, NAR airs inane commercials stating something to the effect that the public should make sure that you are using a Realtor. As opposed to what? An insurance Agent?

This industry suffers from a commodity perception and its leaders can care less.

----Commodititess. My made up word for a commodity business whereby one can make any choice of product or service such as the apple at Market A is the same as the apple at Market B.

When price is the big issue, it usually indicates that the public perception is one of comparing your business apples to apples, as opposed to orange or even carrott to apples. We should always strive to be unique, rendering this likely comparasion impossible.

If I was still a member I would demand my money back. Oh yah they make you pay to play.

August 07, 2004

NAR's Profile of Homebuyers and Sellers in 2003, found that the amount of successful for sale by owner sold homes were 14 percent. This is a 30 percent decline over the last two years in the number of people successfully selling their home "by owner."

Many flat fee for sale by owner services have sprouted out of the natural affinity for the FSBO home seller to seek cheap marketing and representation. Many offer to sell your home for less than $500 for a no frills listings package.

It is still too early to tell if these sites offer much value to the consumer. But it definitely is helping to drive commissions down. And, it is pointed to as proof by those that believe the industry will soon dismantle commissions into "a la carte " style fees.